When I read the exemption of a residential mortage transaction in 1026.32 and the definition of a residential mortgage transaction, can it really mean what I think it means? I understand this exemption is going away effective 1/10/2014; however, I need to make sure I really understand what is currently exempt under this section.
24) Residential mortgage transaction means a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained in the consumer’s principal dwelling to finance the acquisition or initial construction of that dwelling.
I work for a commercial bank that acquired a pool of consumer residential mortgage loans a few years back. All of these loans are secured by the the consumer’s principal dwelling to finance the acquisition of that dwelling. So I can safely say that our current portfolio is exempt from section 32 – correct?
From my understanding of the information you have provided, these loans would not be subject to HOEPA/12 CFR 1026.32. However, if you were to do a refinance, home-improvement, etc. involving one of these properties that loan would be subject to HOEPA. And, as you mentioned, the HOEPA exemptions will be changing January 10, 2014.